I've done a lot of reading, and most people are asking this question about multi-year auto-debt debt on top of mortgages, etc, none of which really apply to me. Here is the run down:
I just bought a used car from a dealership. The car was about $15,000, and I paid $10,000 up front. I can pay the remaining $5,000 off in the next few months (at 8.5% interest), but it has been suggested to me that I should let some of the debt stay outstanding (while paying minimum payments on time each month) for at least a year, or else my credit rating could actually decrease - instead of increase.
Is this correct / significant enough to worry about?
If so, could I simply pay off most of that $5000 debt, then leave just enough so that I can still make my minimum payments until a year or so is up before it's completely paid off? I was thinking that might be a good way to decrease the impact of the 8.5% interest while improving my credit score without having a lot of debt on my back.
Thanks!
Read more: Will paying off my auto loan hurt my credit rating?
